WWE uses WrestleMania as blueprint for new city 'takeover' strategy

World Wrestling Entertainment owner Vince McMahon looks out at the crowd during a segment of NBC's 'Today' show in New York April 2, 2007. REUTERS/Brendan McDermid

By Tim Baysinger

(Reuters) - WWE Inc , owner of the sports entertainment spectacle WrestleMania, has launched a strategy to stage all of its live touring franchises in one city at a time, in a bid to cut costs and improve profitability.

In addition to WrestleMania, the WWE will use its so-called “takeover” strategy for other wrestling events like Summerslam, Survivor Series and The Royal Rumble, providing a four-to-five day live series each quarter. Still, WWE will need to demonstrate it can continue to draw large crowds over the multi-day stretch.

The WWE is coming off a weekend where it sold out five consecutive nights in Orlando, including WrestleMania at the Citrus Bowl, with records for that stadium's attendance of 75,252 fans and its revenue of $14.5 million. Over a five-day stretch that began last Friday the WWE brought in more than 120,000 fans to the city. The other four shows were at the Amway Centre.

Previously, WWE would typically hold events that followed one of their major events in nearby cities, as the quick turnaround time does not allow them to travel far.

WWE’s live event business is its third-largest source of revenue, grossing $144.4M in 2016. Holding multiple live events in one location will increase profitability by streamlining ticket sales and paring down costs, since the ring and set don’t have be taken apart and moved, the company said.

Robert Routh, an analyst for FBN Securities said WWE's plans to stage multiple live events in one city may lift revenue, but concluded it is too early to tell.

“The jury remains out on this,” he said.

Putting on the extravagant shows is complicated. For WrestleMania alone, 100 semi-tractor trailer trucks were needed to ferry equipment to Orlando and two weeks were needed to construct the set which included a super-sized ring.

WWE's live events are also key to growing overseas in marketing including China, a market the WWE is eager to break into.

Nearly a third of the WWE’s $729 million in 2016 revenue came from international, said chief brand officer Stephanie McMahon.

Operating income for their live event business fell 15 percent in the fourth quarter to $6.2 million, while revenue grew 17 percent to 38.6 million in the same period, mainly due to 21 additional events since the previous year.

“We are constantly evaluating that model,” McMahon said, noting they want to stage more events in China to give more exposure to the Chinese nationals they signed last year. “We’re nowhere near the same kind of penetration that we are in other markets.”